Requisites

Additional Requirements

Aims

Provide an introduction to simple financial transactions as used in actuarial science and the mathematics involved.

Overview

This unit explores various simple financial topics from a mathematical point of view.

Learning outcomes

On successful completion of this module students will be able to

Retain knowledge and demonstrate understanding of the topics in this course unit. In particular :
To understand the differences between simple and compound interest and between the force of interest and the nominal rate of interest.
To be familiar with the terms involved in a general cashflow model and how these apply to other simple financial schemes.

Carry out routine calculations involving the topics in this course unit. In particular :
To carry out calculations involving loans and other transactions taking into account different definitions of the interest rate, interest applied on various time-scales and situations where discount rather than interest applies.

Have the basic knowledge and a set of tools and methods that can be used
· in subsequent course units,
· (together with MATH20951) to gain exemption from the Actuarial Profession CT1 examination,
· In a career involving mathematical and/or actuarial topics.

Assessment methods

Other - 20%

Written exam - 80%

Assessment Further Information

Weekly quizzes; Weighting within unit 10%
One in-class test; Weighting within unit 10%
Two hour end of semester examination; Weighting within unit 80%

Syllabus

Brief reminder of underlying mathematics. Geometric Series and Sum, derivatives and integrals, Maclaurin Series for exponential.

Recommended reading

JJ McCutcheon and WF Scott, An Introduction to the Mathematics of Finance, Heinemann, 1986

Feedback methods

Feedback seminars will provide an opportunity for students' work to be discussed and provide feedback on their understanding. Coursework or in-class tests (where applicable) also provide an opportunity for students to receive feedback. Students can also get feedback on their understanding directly from the lecturer, for example during the lecturer's office hour.